French Association law 1901
Many international health insurances, assistance or death & disability contracts are organized through a French Association law 1901, on the French or EU markets.
These Associations reflect the way domestic contracts are managed in France by Master Brokers, who generally assume the brokerage, the claims administration and underwriting. They often respond to a context, and historically brokers tried to best follow their clients abroad, and provide solutions that Insurance Companies were not then equipped to offer and manage. Over time, this arrangement may possibly be preferred for other reasons.
These contracts are often “Group” contracts taken out by an Association law 1901 on behalf of its members.
The contracts backed by an Association law 1901 offer advantages and disadvantages for policyholders:
- The Association Law 1901 does not always collect insurance taxes. For example, the expatriate residing in the UK is liable for insurance tax (6% in 2015) because the risk (the member) is located in the United Kingdom. Therefore, there is a risk that the insured will be sued locally for failure to pay taxes, and have to pay these taxes and any penalties directly,
- The individual products of the Association law 1901 are not subject to specific legislation intended to regulate individual products. The regulations in force for individual contracts of the Chatel Law type would therefore not apply since it is a Group contract taken out by the Association with one or more Insurers (there is currently no benchmark at court),
- These Associations are often supported by brokers who are regulated, and whose job is to defend the interests of their clients. Brokers therefore have an obligation to advise their clients, which may possibly be questionable for those who only offer an “in-house” solution. And do not offer a comparative approach and a choice of several solutions,
- Associations have a more “mutualist” approach to risk, and the agreements negotiated between the group (the Association) and the Insurers can make it possible to free up possibilities and / or budgets. Thus and if a profit-sharing agreement is negotiated, it can also be used to remunerate a little more the manager, the doctors, the brokers involved in the assembly … but also can be used to finance a solidarity fund making it possible to manage exceptional situations (and not covered, or in a very limited way) to which members could be exposed,
- Brokers are generally more responsive and more inventive, and give their members access to solutions that are often more innovative and in line with feedback from the field,
- The Association allows combination of several Insurers in a packaged solution,
- The Association has, because of its size, the possibility of better defending the interests of its members in the face of the constraints and demands of Insurers, and of developing its solutions according to the needs and expectations of its policyholders / members,
- The premiums were expressed according to standards inspired by the French domestic market: single person / family. International insurance companies increasingly offer premiums depending on the age of the insured, which is generally less favorable for families with 3 or 4 children.
This more direct contract presents other constraints for the Insurer, and has the main virtue of allowing dissatisfied Insureds to be able to appeal to it in the event of a dispute or disagreement. In this, the legal context is more protective for the insured insofar as the liability of the Insurance Company is direct and meets legislative criteria.
Insurance companies, for example, are able to collect insurance taxes, and are more able to remit them to state bodies (the question then is whether they all do so, as legal interpretations may differ from one company to another). The payment of taxes, compliance with local regulations (in countries where the Insurance Group may have an entity / subsidiary) or even the implementation of local solutions are all tools that constitute a secure legal environment capable of be supportive of the rights of members.
Generally more complex to set up and monitor (legal, technical and commercial constraints), these contracts also have advantages and disadvantages for policyholders:
- International insurance companies, which also take over the management, are generally a little more equipped with medical staff and a little more careful about the medical profile of people wishing to join. It is therefore possible that a person who is offered exclusions or surcharges by an Insurer is offered insurance under standard conditions by an Association law 1901,
- International insurance companies can more easily offer life solutions than Associations law 1901, which generally limit insurance coverage to the age of 65 or 70 years,
- The “brand” effect can be beneficial for an insured located abroad since an international insurer will be generally known and recognized (which reassures the hospital that it will be paid) while the Association loi 1901 may have a more limited scope,
- International insurance companies are the financial structures currently best placed to invest in efficient management tools (administration, medical networks, etc.) to administer health insurance, assistance, expatriate provident insurance,
- International insurance companies often follow indicators such as demands, trends, profitability, etc. This is not always in line with policyholders’expectations,
- The regulations that aim to protect policyholders (e.g. Solvency) increasingly push Insurers to consider their profitability ratio, which may result in a strengthening of membership rules and a more immediate change in premiums,
- International insurance companies are “the payer” (risk insurer) and the administrator (management), which for some could present a conflict of interest.
Please pay attention to the local regulation
Please note that subscribing to an international health insurance does not free you from the local regulations. If you are eligible to contribute to the local healthcare system in certain countries and do not have local cover in place, you may be subject to paying a tax levy.